How To Reduce Your Facebook Ads CPM

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Having trouble with a high Facebook Ad CPM? Not sure what you should do to improve it? Don’t panic just yet – we’ve got some tips to help you out. In this blog post, we will look at different factors and optimization settings that may impact your CPM. So if you’re curious to find out what these are, and how you can reduce your Facebook ads CPM, keep reading.

What is CPM?

For new advertisers out there, let’s quickly explain what this metric means. CPM stands for Cost per 1,000 Impressions, which is essentially the amount of money Facebook charges you to show your ads to a thousand people. 

This metric is calculated as the total amount spent on an ad campaign, divided by impressions, and multiplied by 1,000. So if you had spent $50 and got 10,000 impressions, your CPM would have been $5.

The average Facebook ads CPM for all industries is $11.19 and has been rising since March 2020, according to recent research from Social Insider.

1. Broaden your audience

One thing to consider when you want to lower your CPM is to broaden your audience. Generally, with Facebook ads, you don’t want to have too broad of an audience, but neither a too specific one. If you have a hyper-targeted audience, your campaign could get quite expensive, but on the other side, if your audience is too broad, you might get a less relevant audience for your product.

The whole idea with broad targeting is to give Facebook some space to seek out the best potential customers for your business. So because of a larger audience, Facebook can serve the lowest cost impressions, leaving you with a much lower CPM. 

2. Check your ad frequency

Facebook’s ad frequency essentially tells you how often an ad is being served to each person. Keep in mind this isn’t an exact metric and that’s why Facebook displays an “average number” for your ad frequency.

Frequency= impressions/reach

A higher frequency is not only going to hurt your CTR and CPC but also CPM. If the same audience is constantly seeing the same ad, they’re not going to engage with it. And because of that, your CTR will start to decrease, while the CPC and CPM will increase. Therefore, you need to constantly monitor your campaigns to understand how the frequency is impacting them.

Facebook doesn’t really specify the ideal ad frequency, but we do recommend keeping it below seven. Anything over that will usually start to negatively affect the performance of your ads.

Sometimes advertisers tend to focus more on their retargeting campaigns, serving ads to the same warm audience over and over. And that’s when your ad frequency starts to go up. So make sure you’re investing in your prospecting campaigns, so you can create better retargeting audiences in the future.

3. Improve your relevance score

Another thing to keep in mind is to create ads that are relevant to your target audience, so you can have a high relevance score. Your relevance score can go all the way from 1 up to 10 based on how much Facebook thinks your audience is relevant and interested in your ads.

Basically, if your target audience engages with your ads, the relevance score of your Facebook ads increases. And a higher relevance score means higher CTR, and eventually, lower CPC and CPM.

The table below shows results for an ad account that ran over a $60k test on Facebook. As you can see, all of these metrics were highly affected by Facebook’s relevance score. Meaning, a higher relevance score significantly improved the CTR while reducing the CPC and CPM.

Facebook Ads relevance score impact
Source: https://www.abetterlemonadestand.com/facebook-relevance-score-optimization/

If your ad relevancy score hasn’t dramatically changed, the increase in your CPM could just mean there’s more competition for the same audience. So because there are more people competing in the auction, in order for you to win that auction, you’ll have to increase your ad budget and spend a bit more than you anticipated.

4. A/B test ad creative formats

When it comes to choosing the creative format, a lot of advertisers tend to go for video ads. But the question is, do video ads really have a lower CPM than static images?

We actually decided to test a static image vs. video and analyze the results throughout four core metrics. All other variables remained the same, so we could really understand the performance of these two creative formats.

With the test completed, we’ve seen that video ads not only had a significantly higher CPM, but also CAC and CPC. 

 

Content

CAC

CR

CPC

CPM

Static image

$96

1.95%

$1.88

$13

Video

$354

0.70%

$2.51

$19

So if you’re still using video ads, think about testing the same creative with a static image.

5. Use automatic placements

Different ad placements will have different costs, so the more competition a certain placement has, the higher the CPM. 

In our case, when we tested manual vs. automatic placements, the performance difference was huge.

 

 

Manual placements

Automatic placements

DIFFERENCE

CAC

$21

$14

50%

CPC

$1.77

$0.7

153%

Regardless of our test, we always recommend going for automatic placements and let the algorithm do the work for you. Then, after your ads have been running for a while, break down your placements and optimize based on the results. If you’re not familiar with Facebook ad placement options and best practices, check out this guide.

6. Choose the right campaign objective

The goals of your ad campaign, which range from Awareness to Consideration to Conversion, may also impact your Facebook advertising costs.

Your objective essentially defines what people should do after they see your ad.

To choose the right ad objective, think about what your business goals are. Or better to say, what the goal of your campaign is. Is it sales on your website, downloads of your app, or subscribers to your blog?

So if your ultimate goal is to drive more sales, then the conversions objective would be the one to go with. On the other hand, if you want to encourage people to sign up for your newsletter, Lead generation would be the appropriate objective to use.

But let’s not forget about seasonality

Facebook Ads work like an auction, where there is a number of advertisers competing against each other. And as with any auction, the amount of competition will directly affect the ad price (CPM).

When the holiday season rolls around, the competition increases, and naturally, the CPM increases as well. So in order for you to remain competitive in auctions, you need to be prepared to raise your bid.

This is definitely not the time for testing new things, so if you want your ads to be successful, make sure you’re using your best ad creatives and copy. Grow your audience throughout the year and let Facebook learn about what works for you – which creative, copy, or audience is converting well.

Conclusion

With Facebook ads, it’s always important to test different variables to gain insights into what works best. Reducing your CPM is not that easy, but if you put some of these tips to practice, we guarantee you’ll see an improvement in all of your high-level advertising metrics.

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